U.S. equity futures moved higher Friday, while the dollar and Treasury yields retreated, as investors looked to close out the month of September on a high night while tracking inflation data at home and aboard.
Stocks booked solid gain yesterday following GDP data that confirmed a slowdown in consumption, a key metric to underlying price pressures, that is likely to be confirmed later this morning when the Bureau of Economic Analysis releases its August update of the Federal Reserve’s preferred inflation gauge.
That optimism was boosted by data this morning from Europe, which showed the biggest drop in core inflation in more than three years in the world’s biggest economic bloc in September, with headline inflation falling to a two-year low of 4.3%.
That’s pushed global government bond yields lower across the board, with benchmark U.S. Treasury notes – which have largely dictated trading on Wall Street this week – easing to 4.54% in overnight trading.
Benchmark 2-year notes were also in retreat, falling to 5.037%, while the U.S. dollar index was marked 0.5% lower against a basket of its global peers at 105.693.
The downside moves, as well as bets on a softer inflation and consumer spending print from the BEA at 8:30 am Eastern time, is giving equity futures a solid boost on the final trading day of the month, with contracts tied to the S&P 500 indicating a solid 20 point advance.
Futures linked to the Dow Jones Industrial Average, meanwhile, suggest a 133 point advance while those linked to the tech-focused Nasdaq were priced for a 105 point gain amid the pullback in Treasury yields.
The softer U.S. dollar, however, allowed global oil prices to rise over the final day of the month, with Brent futures contracts for November delivery up 37 cents to $95.75 per barrel and WTI contracts for the same month up 46 cents at $92.17 per barrel, after hitting a one-year high of $95 earlier in the week.
House Republicans also passed three of the four spending bills needed to potentially avoid a weekend government shutdown, but remain a long way from consensus on a budget agreement. Speaker Kevin McCarthy is also refusing to consider a bipartisan Senate bill, passed earlier this week, that would offer funding until mid-November.
Overnight in Asia, the region-wide MSCI ex-Japan jumped 1.21% thanks in part to the pullback in the dollar and market closures in China, while the Nikkei 225 slipped 0.05% in Tokyo.
In Europe, the Stoxx 600 jumped 1% as the softer-than-expected inflation data pared bets on future European Central Bank rate hikes, while Britain’s FTSE 100 was up 0.82% in London.
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